The inspection targets at checking whether the three are adhering to KYC and AML requirements in the new regulations for trading cryptocurrencies. The country banned anonymous trading for cryptocurrency traders and is enforcing that regulation.

The Financial Services Commission (FSC) will inspect Nonghyup Bank, Kookmin Bank and Hana Bank between April 19 and April 25 to assess if they are adhering to the currently introduced anti-money laundering (AML) and Know-Your-Customer (KYC) rules relating to cryptocurrency trading.

Inconsistent with an earlier announcement, they will be checking the number of trading accounts syncing with the exchanges and their respective deposits. They will also check the trading volume and adherence to the new regulations.

The exercise will be performed together with the Korea Financial Intelligence Unit (FIU). The watchdog that targets at preventing money laundering and illegal financial flows.

NongHyup Bank services Coinone and Bithumb, which are two dominant cryptocurrency exchanges in the country.

This is one of the many regulation exercises that FSC is performing since the introduction of regulations banning anonymous trading. Traders used to run anonymous and virtual bank accounts but now require registering with a new name. The banks retained existing accounts but matching the existing bank accounts with real owners of the crypto exchange accounts. However, it was and is still a requirement for anyone hoping to continue trading cryptocurrencies.

Banks in South Korea now allow anyone to open an account but there is KYC compliance. FIU also asked other financial institutions to conduct self-inspections and audits to assess their own compliance with the new rules.

The country is also drafting a cryptocurrency taxation framework that may come into effect this year although taxation could start in 2019.

South Korea is on the list of top three countries that together have the largest market for cryptocurrencies. Therefore, any happenings in the major developments in this market will affect prices. This is noteworthy considering that it has more than a dozen cryptocurrency exchanges including Bithumb, Korbit, and Coinone.

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David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.